Q: Please help. A few years ago I signed for a mortgage on my daughter’s house. How do I get this changed into her name or taken off my credit report and put onto hers?
I now have a retirement property I want to buy. With her mortgage on my credit report, it appears that I am over extended financially. What do I do?
A: Sadly, your story is a perfect example of how the best of intentions can torpedo future financial decisions.
When you co-sign a mortgage, future creditors will look at your signature as a guarantee that you will pay the entire loan back, should the other party to the contract not pay his or her payments.
In this case, it’s unclear from your email whether you co-signed the mortgage (and your daughter’s name is also on the loan) or you simply bought the property and added your daughter’s name to the title.
Either way, lenders now look at you as having to support a single mortgage on your income, which probably doesn’t leave much room for a second loan.
There is nothing you can do unless your daughter has good enough credit to refinance the property into her own name, or you can find someone else who can co-sign the mortgage for your new retirement home.
In past years, lenders were willing to look at a person like you and have your daughter prove that she is making all of the payments on the mortgage. If your daughter made the payments and you could prove she had, the lender would still consider the other loan in determining whether to grant you a new loan, but it would discount that loan substantially enabling you to get additional financing.
Given the current state of the mortgage and real estate markets, if your lender is treating you as if you had taken out the loan and won’t discount the loan by payments made by your daughter, your only option is to try to get your daughter to refinance the loan to put her name alone on a new mortgage.
Please talk to a real estate attorney for more details.